·Shanghai General Price Reduction is intended to be a market share or a vicious circle

The official guide price of Shanghai GM 40 models is not to tell consumers that the auto industry is so profitable. In fact, the dealer discounts enjoyed by consumer terminals may be much larger than the official price cuts. Does this mean that dealers lose big money to sell, manufacturers Must make big money?
Obviously, it can't be understood that the dealers are willing to exchange the price, on the one hand, to repay the bank loan for the return of funds, and on the other hand, to get the rebate of the manufacturer. The latter is the main purpose of the dealer. At the end of the year, the manufacturer evaluates the seller according to the sales situation of the seller, the satisfaction of the sales user, etc., and finally the rebate to the seller is generally 3%-5% profit, some new brands. The highest can be given 7%-10%. In fact, the remaining bicycle profits are roughly 10%-15%, far less than some other manufacturing industries.
Why is Shanghai GM willing to cut prices officially? The author believes that, first, for the market share, by consolidating or expanding the sales volume of automobiles, and making up the profit difference of the previous losses with after-sales profits, this part of the profits is shared by manufacturers and dealers, and even the most important source of profits of some dealers; Second, in order to improve the capacity utilization rate, the high gross profit margin of the vehicle enterprises mainly depends on the scale effect of the company. The high capacity utilization rate undoubtedly has a significant effect on improving the gross profit margin, especially those automobile enterprises that have been desperately expanding their production capacity in the early stage. Once the production capacity is much higher than the sales volume, Or the capacity utilization rate is too low, the car companies will face inventory backlog, profit decline or even loss. The decline in gross profit of 2014 Changcheng Automobile (601633, Consulting) is related to the low capacity utilization rate of Baoding Car Factory.
At the same time, the production and sales volume of automobiles in the first quarter of this year both fell, even after the Shanghai Volkswagen led the price reduction promotion in April, the market still showed no signs of recovery. At the dealer level, the dealer inventory warning index reached 67.5% in March this year, up 16.6 percentage points from the previous month, above the warning level, and set a record high since last year; in early April, the car inventory was 1,127,400, 4 At the end of the month, the inventory was 1,304,400 units, an increase of 7.1%. Among them, passenger car inventory in April increased by 8.7%.
Everyone still remembers that the inventory increase of dealers last year continued to rise, which triggered the wave of “anti-water” of many brand dealers at the end of the year. Some require manufacturers to increase the amount of subsidies, and some even simply retired. In the face of the dealer inventory warning in the first four months of this year, the foresight of the car is there, the manufacturers can not be indifferent, and the official price reduction of real money is really a last resort.
The author always believes that compared with the large-scale decline in the official price of auto companies, the subsidiary dealers are better than the Ming Dynasty. First, consumers will question whether the original official price of the manufacturer is sincere, and consumers who bought the brand early. Inevitably, it will also be resentful to the brand, and the brand's reputation and brand value will be greatly reduced.
Most importantly, whether Shanghai's GM's large-scale official price cuts can drive sales growth is still unknown, and it is likely to exacerbate consumers' sentiment of holding money. As is known to all, Shanghai GM took the lead in launching a price reduction action in May 2004. North and South Volkswagen followed the price cuts in June and triggered the price hike in the entire auto market. The price cuts further prompted some consumers to continue to increase their holdings. The growth rate of the auto market has been low and it has continued until 2006.
One thing is identifiable. Even if the price cuts are causing the downturn in the industry, the first price-cutting companies will certainly benefit more than the post-price cuts. Take the price cut in 2004 as an example. In May of that year, Shanghai GM took the lead in price reduction to activate the market. The gap between the month and Shanghai Volkswagen narrowed to 500. In June of that year, Shanghai GM had already led the Shanghai Volkswagen 3000 units.

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